BANGLADESH Law and Practice Contributed by: Mohammed Forrukh Rahman, Kamrunnaher Shimu and Salauddin Kader, Rahman’s Chambers
2. Investment Treaties, Free Trade Agreements and Investment Laws 2.1 Bilateral and Multilateral Investment Treaties According to UNCTAD (United Nations Conference on Trade and Development) data, Bangladesh has signed 33 BITs – of which, 25 are currently in force. Key treaty partners include the USA,the UK, China, Germany, Japan, and India. Bangladesh is also a party to several treaties with investment provisions (TIPs). 2.2 Model Bilateral Investment Treaty Bangladesh does not utilise a single “model BIT”. Its treaties reflect the prevailing standards at the time of negotiation. Older BITs typically include broad protec- tions. A notable development is the Joint Interpretative Notes (JIN) adopted in 2017 for the India–Bangladesh BIT (2009), which refined the scope of protections, pegging the Fair and Equitable Treatment (FET) stand- ard to the customary international law minimum. 2.3 Free Trade Agreements Bangladesh is a signatory to regional trade agree- ments – for example, SAFTA (South Asian Free Trade Area) and BIMSTEC (Bay of Bengal Initiative for Multi- Sectoral Technical and Economic Cooperation). How- ever, these currently lack the detailed investor pro- tections and robust investor–state dispute settlement (ISDS) mechanisms found in BITs. 2.4 Interpretive Aids Bangladesh generally does not publish extensive commentaries. Interpretation typically relies on the Vienna Convention on the Law of Treaties (VCLT). The primary exception is the 2017 JIN concerning the India–Bangladesh BIT (2009). 2.5 Investment Laws The primary national legislation is the Foreign Pri- vate Investment (Promotion and Protection) Act 1980 (the “FPIP Act”). It guarantees FET, full protection and security, national treatment, protection against expropriation (requiring adequate compensation), and the repatriation of capital and returns. The FPIP Act provides a baseline level of protection but does not contain provisions referring investors directly to inter- national arbitration.
2.6 Arbitration Clauses in Investor–State Contracts Direct arbitration clauses in contracts between inves- tors and SOEs or state authorities are standard prac- tice – although their robustness varies. • Infrastructure PPPs – agreements for major pro- jects typically include multi-tiered dispute resolu- tion clauses culminating in international arbitration, often specifying recognised institutional rules (SIAC or ICC). • PPAs – PPAs exhibit diverse approaches, as fol- lows. (a) International standard – many PPAs, particu- larly for large-scale fossil fuel projects (eg, Bibiyana II PPA), adopt international best prac- tices, specifying a foreign seat (eg, Geneva and Singapore) and recognised institutional rules (ICC and UNCITRAL). Some explicitly provide pathways to ICSID. (b) Domestic risk – conversely, some PPAs (in- cluding certain renewable energy agreements) stipulate arbitration under the Bangladesh Arbitration Act 2001 with a seat in Dhaka. This poses significant risks of judicial interference, as evidenced in Saipem . • The BERC conflict and the hierarchy of dispute resolution – the Bangladesh Energy Regulatory Commission (BERC) Act 2003 grants the BERC statutory authority to arbitrate disputes between licensees in the energy sector. However, this statu- tory mandate operates within a clear legal hierar- chy, as follows. (a) Treaty arbitration (ISDS) – international treaty obligations supersede domestic law. If a foreign investor invokes a BIT, they can access interna- tional arbitration (eg, ICSID), bypassing BERC entirely. (b) Contractual arbitration – the Supreme Court of Bangladesh has affirmed that specific, mutu- ally agreed arbitration clauses within a PPA (eg, specifying ICC/SIAC rules) supersede the BERC’s general statutory arbitration mandate. • Regional mechanisms – certain regional agree- ments mandate the South Asian Association for Regional Cooperation (SAARC) Arbitration Council (“SARCO”) as the dispute resolution forum (eg,
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